Correlation Between PLAYTIKA HOLDING and China Construction

Can any of the company-specific risk be diversified away by investing in both PLAYTIKA HOLDING and China Construction at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PLAYTIKA HOLDING and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLAYTIKA HOLDING DL 01 and China Construction Bank, you can compare the effects of market volatilities on PLAYTIKA HOLDING and China Construction and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PLAYTIKA HOLDING with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and China Construction.

Diversification Opportunities for PLAYTIKA HOLDING and China Construction

-0.17

Correlation Coefficient

PLAYTIKA HOLDING  China Construction

Good diversification

The 3 months correlation between PLAYTIKA and China is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and PLAYTIKA HOLDING is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PLAYTIKA HOLDING DL 01 are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and China Construction go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and China Construction

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the China Construction. But the stock apears to be less risky and, when comparing its historical volatility, PLAYTIKA HOLDING DL 01 is 2.63 times less risky than China Construction. The stock trades about -0.36 of its potential returns per unit of risk. The China Construction Bank is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  57.00  in China Construction Bank on October 9, 2024 and sell it today you would earn a total of  19.00  from holding China Construction Bank or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PLAYTIKA HOLDING DL 01  vs.  China Construction Bank

PLAYTIKA HOLDING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYTIKA HOLDING DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAYTIKA HOLDING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

China Construction Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Construction Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYTIKA HOLDING and China Construction

The main advantage of trading using opposite PLAYTIKA HOLDING and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTIKA HOLDING position performs unexpectedly, China Construction can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Construction will offset losses from the drop in China Construction's long position.

The idea behind PLAYTIKA HOLDING DL 01 and China Construction Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.